How many drivers do we really need?

Do we really have a shortage of truck drivers in this country or are we simply adding up the empty seats across the land and calling that under-utilized capacity a driver short-age?

The very first indicator of a shortage -- any shortage -- is a cost increase. Hay is currently in high demand across much of the Midwest because of drought conditions, and prices are going through the roof. Several years ago, when a good portion of the world's wheat production was diverted to biofuel feedstock, the cost of pasta, beer, and other grain-based products skyrocketed. Kraft Dinner jumped in my grocery store from five boxes for a buck to four boxes for three dollars.

In early 2007, Mexican consumers faced a tortilla crisis; prices tripled and riots ensued. A beer panic hit Germany later that year as prices of the golden brew soared -- partly due to biofuel diversion.

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That's what happens when you have a shortage, or the threat of a genuine and pending shortage. One could hardly call what's happening in trucking a crisis.

Shippers are watching the situation. Analysts are warning of potentially higher prices at the grocery stores. Truckload fleets are upping driver pay by a penny a mile here and a dollar a day there. Rates are more or less stagnant, store shelves re-main fully stocked, and only the worst paying freight is slow to move. By any of the usual economic indicators, we are in no imminent danger of a driver shortage or a capacity crisis.

I think the problem is actually too many trucks, not too few drivers.

Phantom Capacity

I believe the problem is actually just a numbers game. Fleets have unseated trucks, they can't hire drivers to fill those trucks, therefore there's a shortage. That however, contradicts established economic wisdom -- as outline above.

Here's what I think is actually happening.

Let's say carrier with 1000 trucks has 100 of them parked against the fence. That carrier believes that if those 100 trucks had drivers it could move that much more freight.

Across town, there's another 1000-truck fleet with 100 unseated power units. Across the state, there are six more such carriers, and across the country, we find hundreds of fleets all with, say, 10 percent unused capacity. Every one of those fleets has its eye on those phantom 100 loads they are unable to move because they do not have the driv-ers. Add it all up and we have a perceived shortage of a few thousand drivers. In reality, those fleets might actually be able to put only 10 drivers to work, not 100.

As each fleet reports unseated rolling stock, the tally of missing drivers become cumulative, leading to much larger and more alarming figures than is probably really the case.

Transportation demand and supply are presently close to equilibrium, though I still believe supply exceeds demand by a measurable margin. Were it otherwise, trucking would be calling the shots, not the shippers and the load brokers.

When you get right down to it, the perceived labor shortage exists primarily in the truck-load sector -- particularly among larger fleets. That crowd has a harder time filling empty seats than other sectors, such as drayage, LTL, private carriers and others. Maybe that says more about the business model than the labor supply. Or maybe there are just too many trucks.

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Comments

1.Kurt[ August 03, 2012 @ 12:43PM ]

One of the figures the media seems to be using is that there is a "shortage" of between 200,000 and 300,000 drivers. If this many shipments were NOT being hauled every week, there would be a rapid change in rates as you have mentioned. Filling this many seats will only enable companies to continue to cut rates against each other, fighting their way to see who can get to the bottom first, and not allowing any increases in driver's wages.

2.5string[ August 07, 2012 @ 05:41PM ]

Right on the money Jim.I think driver shortage claims are just a tool for recruiting new seat warmers.

3.Diligent[ August 09, 2012 @ 06:17PM ]

While there is a certain amount of validity to the parked trucks scenario, the plan facts are as followed.

More people are exiting the industry than entering it. All of the old timers are retiring or getting ill. The people coming into the industry only stay long enough to get a BIG taste of sh*t, and they're gone.

While no need to panic at this point, because there is certainly enough trucks and drivers to handle the volume presently, the future should be very interesting, to see how all of the folks who do nothing but bad mouth truck drivers all day long, get a cup of Starbucks!

I will try to raise ALL of my fingers while waving goodbye, upon my departure!

4.Ray[ August 11, 2012 @ 03:04AM ]

The biggest problem imo....super carriers. Propaganda. Get rooks and pay them nothing. And when does the monopoly rule apply? These super carriers have enough money and influence to even have ridiculous mandates passed like eobrs. If they are concerned with safety, crack down on shippers and receivers. Charge dtention time and pay ur driver as well as better training for rooks. According to OOIDA, super carriers are fighting tooth and nail against this simply because this cost money and would also make it harder to fill empty seats. How about this for a mandate...500 tractor limit for a company...no loopholes...

5.darrell[ August 16, 2012 @ 02:31AM ]

back when i was driveing it was union job i was makeing more twenty years ago when i retired than driver's currently make pay needs to increase an average of twenty more grand a year for truckload everybody seems to complain about the union but i'm collecting almost three grand a month ,it was good to me and my family full health coverage i feel bad for the unrepresented driver ,the company have all power now its about share holder enrichment they don't care about the driver's .